731. A Renewed Political Deal for Sustainable Growth within the Eurozone and the EU: An Open Letter to the President of the European Council
- Author:
- Daniel Gros, Stefano Micossi, Richard Baldwin, Giuliano Amato, and Pier Carlo Padoan
- Publication Date:
- 12-2010
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies
- Abstract:
- Under current policies, the European Union will only be able to pull itself out of low growth and high unemployment very slowly – too slowly to exclude dangerous economic and political assaults on the Union's continuing cohesion and viability. What is needed is a substantial increase in the EU output growth rate, which has been persistently low for too long a time. With low growth, sovereign debt sustainability in a number of member states will remain uncertain, possibly leading to renewed strains in financial markets and rising spreads that will aggravate the costs of budgetary consolidation. The divergences in productivity and competitiveness and the current external imbalances they engendered can be unwound at an acceptable cost only if growth accelerates in the core and the periphery. On present trends, the adjustment burden might be unbearable for peripheral countries and generate strains that may eventually undermine the euro.
- Topic:
- Economics, Regional Cooperation, Monetary Policy, and Governance
- Political Geography:
- Europe